Shares of Manugistics Group Inc. lost one-fourth of their value yesterday after the company said it would see an adjusted operating loss rather than operating income for its first fiscal quarter and that revenue would be less than expected.

The Rockville software company's shares traded as low as $5.60 before closing at $5.90, down $2.04 or 25.69 percent on the day. The stock dropped after Manugistics released revised financial forecasts for its first fiscal quarter. The numbers were released after the stock market closed Tuesday.

SWS Securities Inc. lowered its rating on the stock to sell from neutral.

"Manugistics is faced with poor sales execution combined with challenging macro conditions. We do not expect the company to turn profitable in [fiscal year 2003], and management failed to properly manage the Street's expectations, in our opinion," SWS said in a published note.

Manugistics makes software to help companies manage their production, suppliers and vendors. The manufacturing industry is slowly coming out of its slump, and Manugistics attributed its lowered projections to a poor economy. Chairman and Chief Executive Officer Gregory J. Owens said business in Europe was a disappointment.

"This is not a broken model; this is a company that has the right solutions and can take them to market," Owens told analysts during a conference call. "However, the economic downturn is preventing the sales from happening, so this is an economic situation which we have to adjust to."

The company said it would have layoffs to cut costs, though Owen would not discuss details of the layoffs before first-quarter results are reported June 27.

Manugistics said it expects to report an adjusted operating loss of $16 million to $18 million, and an adjusted loss before income taxes of $18 million to $20 million for the quarter that ended May 31. The company had previously said it expected a positive adjusted operating income for the quarter and an adjusted net loss of about 2 cents per diluted share.

Manugistics also said it expects revenue to total $71 million to $73 million for the quarter, including software revenue of $24 million to $25 million. Previously, the company had said it expected revenue of $84 million to $85 million for the first quarter.

The company's shares hit a 52-week high of $42.37 in June 2001 and a 52-week low of $4.94 in September.